The Italian economy witnessed a drop in the activity of the service sector in July, reaching 53.1 from 54.4 recorded in June. This result is the lowest in the past 13 months after the economists forecast that the economy is coming back on track.

Market Economics published a report by Paul Smith on Wednesday, showing that the decline put a halt to the growth in new business as a result of the cut down in the public demand of the products of the service sector. Smith also added that the market’s deterioration is the most evident since August 2009.

Smith added in his report, “Behind the weaker growth profile for the service sector is a failure of confidence to rebound from the record fall seen in the aftermath of the emergency Budget”.

Alan Clarke, an economist in BNP Paribas Bank, expressed his disappointment in this fiscal quarter that ended up being “a blip”. Clarke predicted that the economy would recover and that the Government should not be worrying about any signs of inflation or interest rates during the coming months, at least. However, after the drop, Clarke is scared that the future of the market and the industry in Italy might not be as stable as it should be.